2018 (12) TMI 1275

Head Note / Extract:Classification of supply - Composite supply or mixed supply - Transfer of right to use - activities / transactions of renting of workwear - Transfer of right in goods or not - entry 5 (f) of Schedule II of Central Goods and Services Act, 2017.

Held that:- It is clear that for the contractual period, the ownership of the workwear rests with the applicant and only the right to use the workwear is intended to be passed on to the customer for the period of contract - the activity of renting workwear qualifies as ‘transfer of the right to use’ any goods for any purpose (whether or not for a specialized period) for cash, deferred payment or other valuable consideration and thus would be categorized as supply of services within the meaning of entry 5(f) of Schedule II of the GST Act.

Renting of work wear along with other services such as transportation, weekly washing etc - The provision of renting of workwear is combined with provision of ancillary services such as transportation, weekly clearing, maintenance, repairs and finishing of the said workwear. Thus applicant satisfies one of the conditions that is essential character of ‘Bundled Service’ of the composite supply - also, services other than renting of workwear are being supplied not in the ordinary course of business but under the compulsion imposed by the applicant on the customer.

If the particular supply is a mixed supply, the first requisite is to rule out that the supply is a composite supply. A supply can be a mixed supply only if it is not a composite supply. As a corollary it can be said that if the transaction consists of supplies not naturally bundled in the ordinary course of business then it would be mixed supply - the possibility of the present transaction being a composite supply is already ruled out, and the fall out is that the transaction qualifies as a mixed supply as defined in section 2(74) of the GST Act.

Ruling:- The activities/transactions of renting of workwear qualify as “transfer of right to use” of goods in terms of entry 5 (f) of Schedule II of Central Goods and Services Act, 2017.

The supply of renting of workwear along with other services such as transportation, weekly washing etc. for a single consideration is a mixed supply under section 2 (74) of CGST Act.